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Mothers Work Reports Third Quarter Fiscal 2007 Earnings
PHILADELPHIA, July 24 /PRNewswire-FirstCall/ -- Mothers Work, Inc.
(Nasdaq: MWRK), the world's leading maternity apparel retailer, today
announced operating results for the third quarter of fiscal 2007 ended June
30, 2007.
Net income for the third quarter of fiscal 2007 was $1.0 million, or
$0.17 per common share (diluted), compared to net income for the third
quarter of fiscal 2006 of $8.8 million, or $1.54 per common share
(diluted). During April 2007, the Company redeemed the remaining $90
million principal amount of its outstanding 11-1/4% Senior Notes, which
resulted in an after-tax charge of $0.73 per share in the third quarter of
fiscal 2007. Net income before the debt repurchase charge for the third
quarter of fiscal 2007 was $5.5 million, or $0.90 per common share
(diluted) compared to the net income for the third quarter of fiscal 2006
of $8.8 million, or $1.54 per common share (diluted), which did not include
any debt repurchase charge. The Company's earnings per share before the
debt repurchase charge for the third quarter were in line with the
Company's updated diluted earnings per share guidance, provided in its July
12, 2007 press release, of between $0.86 and $0.90 per share.
Net income for the first nine months of fiscal 2007 was $5.0 million,
or $0.81 per common share (diluted), compared to net income for the first
nine months of fiscal 2006 of $9.7 million, or $1.77 per common share
(diluted). Net income before debt repurchase charges for the first nine
months of fiscal 2007 was $10.7 million, or $1.74 per common share
(diluted), compared to the net income for the first nine months of fiscal
2006 of $9.7 million, or $1.77 per common share (diluted), which did not
include any debt repurchase charges. The debt repurchase charges for the
first nine months of fiscal 2007 resulted from the Company's redemption of
$25 million of its Senior Notes in December, 2006 and the redemption of the
remaining $90 million of its Senior Notes in April 2007.
As previously announced, on April 18, 2007 the Company completed the
redemption of the remaining $90 million principal amount of its outstanding
11-1/4% Senior Notes through a new Term Loan financing, which the Company
expects will result in a decrease in annualized pre-tax interest expense of
approximately $3.6 million, and an annualized benefit to earnings per share
of approximately $0.35 per share. This decrease in annualized interest
expense from the new Term Loan financing began to be recognized in the
Company's third quarter. The redemption of the Senior Notes, which was at a
price of 105.625% of principal amount, plus accrued interest, resulted in a
"Loss on extinguishment of debt" of $7.3 million on a pre-tax basis,
consisting of the $5.1 million cash redemption premium and $2.2 million of
non-cash expense from the write-off of unamortized deferred financing costs
and debt issuance costs. This debt redemption charge, which was $0.73 per
share on an after-tax basis, was recognized in the Company's third quarter.
Net sales for the third quarter of fiscal 2007 decreased 6.5% to $153.2
million from $163.9 million in the same quarter of the preceding year. The
decrease in sales versus last year resulted primarily from a decrease in
comparable store sales, partially offset by increased sales from the
Company's licensed relationship and marketing partnerships. Comparable
store sales decreased 8.2% during the third quarter of fiscal 2007 (based
on 1,393 locations) versus a comparable store sales increase of 6.4% during
the third quarter of fiscal 2006 (based on 1,472 locations). For the
quarter ended June 30, 2007, the Company opened five stores, including four
multi-brand store openings, and closed 13 stores, with eight of the store
closings related to multi-brand store openings. As of the end of June 2007,
the Company operates 787 stores, 812 leased department locations and 1,599
total retail locations, compared to 815 stores, 725 leased department
locations and 1,540 total retail locations operated at the end of June
2006. Adjusted EBITDA was $16.1 million for the third quarter of fiscal
2007, a 31.2% decrease from the $23.4 million of Adjusted EBITDA for the
third quarter of fiscal 2006. Adjusted EBITDA is defined in the financial
tables at the end of this press release.
Net sales for the first nine months of fiscal 2007 decreased 3.1% to
$445.6 million from $459.9 million for the same nine months of the
preceding year. The decrease in sales versus last year resulted primarily
from a decrease in comparable store sales, partially offset by increased
sales from the Company's leased department and licensed relationships and
marketing partnerships. Comparable store sales decreased 4.1% during the
first nine months of fiscal 2007 (based on 1,365 locations) versus a
comparable store sales increase of 3.7% during the first nine months of
fiscal 2006 (based on 959 locations). During the nine months ended June 30,
2007, the Company opened 16 stores, including nine multi-brand stores, and
closed 39 stores, with 19 of these store closings related to multi-brand
store openings. Adjusted EBITDA was $39.6 million for the first nine months
of fiscal 2007, a 7.7% decrease from the $42.9 million of Adjusted EBITDA
for the first nine months of fiscal 2006.
Rebecca Matthias, President and Chief Creative Officer of Mothers Work,
noted, "Our sales for the third quarter were weaker than we had planned and
we attribute this primarily to a continued difficult overall economic and
retail environment, unseasonably cool weather early in the quarter, and,
importantly, a negative impact from the current popularity of certain
styles in the non- maternity women's apparel market, such as trapeze and
baby-doll dresses and tops, which can more readily fit a pregnant woman
early in her pregnancy than typical non-maternity fashions. The weak sales
trend we have seen in recent months has also resulted in us taking some
increased markdowns to help manage our inventory level and to respond to a
greater level of clearance markdowns by our maternity competition, who we
believe have also experienced weaker than planned maternity sales and thus
needed to take greater markdowns to manage their inventory levels. This
extra level of markdowns we took, although not at the extremely high level
of fiscal 2004 and fiscal 2005, did result in somewhat lower than planned
gross margins. It is very important to note that with our aggressive
actions to manage our inventory level, including increasing our markdown
levels, our overall inventory level is less than 1% higher than last year,
and we believe we can continue to manage our inventory levels without
resorting to excessive markdown levels.
"Looking forward, we continue to focus on developing great maternity
product under each of our brands and continuing our strategic transition,
including continuing to expand our leased department and licensed
relationships and marketing partnerships, and continuing to roll out our
multi-brand stores. We do not believe that the recent weakness in our sales
performance is indicative of any impairment of our long-term prospects but
rather, as previously noted, is indicative of the weak overall economic and
retail environment and the more pregnancy-friendly fit of certain current
non- maternity fashion trends.
"As of June 30, 2007, we have 40 two-brand Mimi combo stores, 3 triplex
stores, and 14 Destination Maternity(R) Superstores. We believe there is a
significant opportunity to expand our multi-brand store concepts, which we
believe will generate higher sales per store and improved store operating
profit margins by reducing store expense percentages through the efficiency
of operating one larger store rather than multiple smaller stores in a
single market. In addition, in certain cases, we believe our multi-brand
store concepts will increase overall sales in the geographical markets they
serve. Opening these multi-brand stores will typically involve closing two
or more smaller stores and may frequently result in one-time store closing
costs resulting primarily from early lease terminations. We opened two
Destination Maternity Superstores in fiscal 2007, and are targeting to open
an additional 6 to 8 Superstores in fiscal 2008, including four locations
already identified and negotiated. We are the only national retailer that
is solely focused on maternity, and we are further differentiating
ourselves as the ultimate maternity destination with these large,
well-assorted, "must visit" multi- brand store concepts. Based on our
internal research, we believe that over the next several years we have the
potential to expand the Destination Maternity chain to 40 to 50 or more
total Destination Maternity superstores in the United States and to expand
the Mimi combo store chain to 70 to 80 or more total Mimi combo stores in
the U.S.
"Over the past several years, we have increased the sales we generate
from our leased department and licensed relationships. Since the beginning
of fiscal 2005, we have become the exclusive maternity apparel provider to
Sears(R) and Kohl's(R) and we believe that we have a significant
opportunity to continue to increase the sales we generate from our leased
department and licensed relationships. We believe these growth
opportunities include additional maternity apparel department locations
with our current partners as well as developing relationships with new
partners. As part of working towards expanding our business with our
existing leased partners, we have converted most of our Macy's(R) leased
department locations from Motherhood Maternity(R) branded departments to
Mimi Maternity(R) branded departments carrying both Motherhood and Mimi
product. Our continued commitment to this strategy of growing the sales we
generate from our leased department and licensed relationships is also
demonstrated by our new leased department relationships in the past year
with Boscov's(R) and Gordmans(R), two regional department store chains.
"We believe our customers, particularly first-time parents, are
entering a new life stage that drives widespread changes in purchasing
needs and behavior, thus making our maternity customer a highly-valued
demographic for a range of consumer products and services companies. We
have been able to leverage the relationship we have with our customers to
earn incremental revenues, and we expect to expand these revenues through a
variety of marketing partnership programs utilizing our extensive opt-in
customer database and various in-store marketing initiatives, which help
introduce our customers to various baby and parent-related products and
services offered by leading third-party consumer products and services
companies. Whereas our current revenues in this area have predominantly
been derived from the pre- natal portion of our customer database, we have
taken steps to update and manage our entire customer database so we can
actively market our full opt-in customer database to a much broader range
of consumer product and services companies that market to families with
children.
"Also, we continue to expand futuretrust(R), our MasterCard(R)-based
college savings program that we market through our stores and our internet
sites. The futuretrust program enables members to help save for their
child's (or grandchild's or any other relative's or friend's) college
education when they link their futuretrust MasterCard to a tax-advantaged
529 College Savings account. Members earn rebates on all purchases with
their futuretrust MasterCard that are automatically contributed to their
529 College Savings account and can also earn additional college savings at
merchants in the futuretrust Preferred Merchant Network. We have entered
into relationships with select providers of 529 savings programs, tax
preparation services, home mortgages and real estate services for our
futuretrust members and, in the future, we anticipate further developing
our futuretrust program into a full service financial services and
information resource for our members known as the Futuretrust Family
Financial Center(TM). We anticipate that additional potential services
offered through the Futuretrust Family Financial Center may include online
banking, life insurance and other financial services needed by families
with children. We plan to offer such services through relationships with
high-quality third-party providers of these services.
"Our sales thus far in July have continued to be weak, but the trend
has improved somewhat compared to June. Our comparable store sales for June
decreased 5.4% even with the favorable impact of approximately 2 to 3
percentage points due to having five Saturdays in June 2007 compared to
four Saturdays in June 2006. Thus, adjusting for this "days adjustment"
impact, our comparable store sales for June would be down approximately
7.4% to 8.4%. Based on our sales results thus far in July, we expect our
comparable store sales for the full month of July to be in the range of
down 8.0% to down 10.5%, which includes a projected unfavorable impact of 2
to 3 percentage points due to having only four Saturdays in July 2007
compared to five Saturdays in July 2006. Thus, adjusting for this "days
adjustment" impact, we project that our comparable store sales for July
would be down approximately 5% to 8%. Comparable store sales for July 2006
increased 3.9%, and this figure would have been between 1 and 2 percentage
points higher if there had not been one less Friday and one more Monday in
July 2006 compared to July 2005. As in June, we are continuing to take more
markdowns than planned in order to continue to manage our inventory levels,
but we are accomplishing this without resorting to excessive markdown
levels.
"For the fourth quarter of fiscal 2007, we are targeting net sales in
the $138.5 million to $143.5 million range, based on an assumed comparable
store sales decrease of between 2% and 6% for the quarter. Based on this
targeted sales, we are targeting earnings per common share (diluted) of
between a loss of $(0.27) per share and $0.00 per share for the fourth
quarter of fiscal 2007, as compared to last year's fourth quarter diluted
loss of $(0.01) per share, excluding the charge related to our redemption
of $10 million of Senior Notes in the fourth quarter of fiscal 2006.
"We are targeting net sales for fiscal 2007 in the $584 million to $589
million range, representing a sales decrease of approximately 2% to 3%
compared to fiscal 2006, based on an assumed comparable store sales
decrease of between 3.5% and 4.5% for the full fiscal year, partially
offset by expected increased sales contribution from our marketing
partnerships and our leased department and licensed relationships.
"Our targeted sales for fiscal 2007 reflect our plan to open
approximately 19 new stores during the year, including approximately 10 new
multi-brand stores, and our plan to close approximately 46 stores, with
approximately 21 of these planned store closings related to openings of new
multi-brand stores, including our Destination Maternity Superstores. We
plan to open approximately 130 new leased department locations for fiscal
2007, primarily from our recent agreements for exclusive leased department
relationships with Boscov's and Gordmans. In addition, we distribute our Oh
Baby! by Motherhood(TM) collection through a licensed arrangement at Kohl's
stores throughout the United States and on Kohls.com. Kohl's currently
operates 834 stores in 46 states, compared to 749 stores in 43 states a
year ago.
"We project that our gross margin for fiscal 2007 will be approximately
52.1% of net sales, a slight decrease from our 52.2% gross margin in fiscal
2006, driven by the spreading of fixed product overhead costs over a
smaller sales base, largely offset by higher pre-overhead merchandise gross
margins and, to a lesser extent, increased marketing partnership revenues.
The projected increase in our pre-overhead merchandise gross margins for
the year primarily reflects decreased markdown levels compared to last year
for the first half of the fiscal year, and planned continued product cost
reductions throughout the year. We expect our operating expenses to
increase slightly as a percentage of net sales for fiscal 2007 versus
fiscal 2006, primarily as a result of negative expense leverage associated
with the weaker comparable store sales, partially offset by reduced
incentive compensation and stock compensation expense, reduced expenses for
store closings, reduced impairment charges for write-downs of store fixed
assets, expense leverage from our multi-brand stores, as well as a
continued sharp focus on expense control.
"Based on these assumptions, we are targeting operating income for
fiscal 2007 in the $24.8 million to $27.4 million range, representing a
projected decrease of between approximately 10% and 18% from our fiscal
2006 operating income of $30.3 million, and we are targeting Adjusted
EBITDA in the $43.9 million to $46.5 million range, representing a
projected decrease of between approximately 10% and 15% from our fiscal
2006 Adjusted EBITDA of $51.7 million. Also, based on these assumptions, we
are targeting diluted earnings per common share of between $1.49 and $1.74
per share excluding the charges related to our $25 million debt repurchase
in December 2006 and our $90 million debt repurchase in April 2007,
representing a change of between a decrease of 13% and an increase of 1%
over our $1.72 diluted earnings per share before debt repurchase charges
for fiscal 2006. This earnings guidance range is lower than our previous
guidance range for fiscal 2007 diluted earnings per share of between $2.32
and $2.85 per share, excluding debt repurchase charges, provided in our
April 24, 2007 press release, due to the reduction in our sales and gross
margin projections for the year. Including the first quarter fiscal 2007
debt repurchase charge of approximately $0.21 per share and the third
quarter fiscal 2007 debt repurchase charge of approximately $0.73 per
share, we are targeting reported diluted earnings per common share of
between $0.56 and $0.81 per share for the full year fiscal 2007, compared
to our $1.63 reported diluted earnings per share for fiscal 2006, which was
adversely affected by a debt repurchase charge of $0.09 per share. Of
course, our ability to achieve our targeted results will depend, among
other factors, on the overall retail, economic, political and competitive
environment as well as the results from our new initiatives.
"We are planning our fiscal 2007 capital expenditures to be
approximately $16 million, compared to $13.9 million for fiscal 2006,
primarily for new store openings, expanding and relocating selected stores,
store remodelings, and some continued investment in our management
information systems and distribution center. We expect our inventory at
fiscal 2007 year end to increase somewhat from fiscal 2006 year end and to
be somewhat higher than planned due to our lower planned sales, but we
continue to tightly plan our inventory levels relative to sales and we
believe we can manage our inventory levels without resorting to excessive
markdown levels. Based on these targets and plans, we expect to generate
positive free cash flow before financing activities during fiscal 2007. We
are also very pleased with our strong financial liquidity and our progress
in reducing our debt and our ongoing interest expense. During the
twelve-month period ended June 30, 2007, the Company reduced its debt
balance by $35 million, while still carrying a balance of cash and cash
equivalents of $7.4 million at June 30, 2007. As of June 30, 2007, we had
$90 million outstanding principal amount of our new lower-cost Term Loan,
the proceeds of which we used in April 2007 to redeem our remaining Senior
Notes. In addition, as part of the refinancing transaction, in March 2007
the Company amended its existing $60 million revolving credit facility in
order to permit the new Term Loan financing. This amendment of the credit
facility also extended its maturity from October 15, 2009 to March 13,
2012, and modestly increased its size to $65 million. As of June 30, 2007,
we had no direct borrowings under our credit facility, and we had
approximately $57 million of availability under our credit facility.
Although we had modest borrowings from our credit facility during portions
of the second and third quarters of fiscal 2007, reflecting seasonal and
other timing variations in cash flow and our use of cash to repurchase $35
million principal amount of Senior Notes from August 2006 through December
2006, we did not have any outstanding credit line borrowings at the end of
either the second or third quarter of fiscal 2007 and expect to have no
outstanding credit line borrowings at the end of fiscal 2007. Our average
level of borrowings under our credit facility was $0.7 million for the
first nine months of fiscal 2007.
"Looking forward to fiscal 2008, we expect to see an improved sales
trend and expect to generate significantly higher earnings in fiscal 2008
than in fiscal 2007, while generating strong free cash flow. We are
targeting net sales of approximately $595 to $611 million for fiscal 2008,
based on assumed comparable store sales increase of between 1% and 4%. Our
targeted sales for fiscal 2008 reflect our plan to open approximately 25 to
30 new stores, including 10 to 15 new multi-brand stores, and close
approximately 50 to 60 stores, with approximately 25 to 30 of these planned
store closings related to openings of new multi-brand stores, including our
Destination Maternity Superstores. Based on our assumed comparable store
sales projection range, we are targeting operating income for fiscal 2008
in the $26 to $33 million range, and Adjusted EBITDA (representing
operating income before certain non- cash charges) in the $46 to $53
million range. We are targeting diluted earnings per share for fiscal 2008
of between $1.89 and $2.56 per share, a significant improvement in earnings
versus fiscal 2007. Of course, our ability to achieve these targeted
results will depend, among other factors, on the overall retail, economic,
political and competitive environment as well as the results from our new
initiatives. We plan to provide more detailed guidance for fiscal 2008,
including certain quarterly guidance, in November when we report fourth
quarter earnings.
"We are planning our fiscal 2008 capital expenditures to be between $17
million and $19 million, primarily for new store openings, expanding and
relocating selected stores, store remodelings, and continued investment in
our management information systems and for continued distribution center
automation. With respect to inventory, we are planning on flat to slightly
increased overall inventory levels from our projected inventory at the end
of fiscal 2007. Based on these targets and plans, we expect to generate
strong free cash flow during fiscal 2008."
As announced previously, the Company will hold a conference call today
at 9:00 a.m. Eastern Time, regarding the Company's third quarter fiscal
2007 earnings, future financial guidance, and certain business initiatives.
You can participate in this conference call by calling (210) 234-0026.
Please call ten minutes prior to 9:00 a.m. Eastern Time. The passcode for
the conference call is "Mothers Work." In the event that you are unable to
participate in the call, a replay will be available through Wednesday,
August 8, 2007 by calling (203) 369-0699.
Mothers Work is the world's largest designer and retailer of maternity
apparel, using its custom TrendTrack(TM) merchandise analysis and planning
system as well as its quick response replenishment process to "give the
customer what she wants, when she wants it." As of June 30, 2007, Mothers
Work operates 1,599 maternity locations, including 787 stores,
predominantly under the tradenames Motherhood Maternity(R), A Pea in the
Pod(R), Mimi Maternity(R), and Destination Maternity(R), and sells on the
web through its DestinationMaternity.com and brand-specific websites. In
addition, Mothers Work distributes its Oh Baby! by Motherhood(TM)
collection through a licensed arrangement at Kohl's(R) stores throughout
the United States and on Kohls.com.
The Company cautions that any forward-looking statements (as such term
is defined in the Private Securities Litigation Reform Act of 1995)
contained in this press release or made from time to time by management of
the Company, including those regarding expected results of operations,
liquidity and financial condition and new business initiatives, involve
risks and uncertainties, and are subject to change based on various
important factors. The following factors, among others, in some cases have
affected and in the future could affect the Company's financial performance
and actual results and could cause actual results to differ materially from
those expressed or implied in any such forward-looking statements: our
ability to successfully manage our new initiatives, future sales trends in
our existing store base, weather, changes in consumer spending patterns,
raw material price increases, consumer preferences and overall economic
conditions, the impact of competition and pricing, availability of suitable
store locations, continued availability of capital and financing, ability
to hire and develop senior management and sales associates, ability to
develop and source merchandise, ability to receive production from foreign
sources on a timely basis, potential stock repurchases, potential debt
prepayments, changes in market interest rates, war or acts of terrorism,
and other factors set forth in the Company's periodic filings with the
Securities and Exchange Commission, or in materials incorporated therein by
reference.
MOTHERS WORK, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Third Quarter Ended Nine Months Ended
_____________________ ___________________
6/30/07 6/30/06 6/30/07 6/30/06
_____________________ ____________________
Net sales $153,227 $163,883 $445,568 $459,919
Cost of goods sold 72,105 74,023 211,336 217,853
______________________ ____________________
Gross profit 81,122 89,860 234,232 242,066
Selling, general and
administrative expenses 70,055 71,933 208,668 215,035
______________________ ____________________
Operating income 11,067 17,927 25,564 27,031
Interest expense, net 2,043 3,541 7,965 11,120
Loss on extinguishment of debt 7,330 - 9,423 -
______________________ ____________________
Income before income taxes 1,694 14,386 8,176 15,911
Income tax provision 661 5,612 3,189 6,207
______________________ ____________________
Net income $ 1,033 $ 8,774 $ 4,987 $ 9,704
====================== ====================
Net income per share - basic $ 0.18 $ 1.64 $ 0.86 $ 1.83
====================== ====================
Average shares outstanding
- basic 5,838 5,334 5,789 5,298
====================== ====================
Net income per share
- diluted $ 0.17 $ 1.54 $ 0.81 $ 1.77
====================== ====================
Average shares outstanding
- diluted 6,140 5,684 6,168 5,496
====================== ====================
Supplemental information:
Net income, as reported $ 1,033 $ 8,774 $ 4,987 $ 9,704
Add: loss on extinguishment of
debt, net of tax 4,471 - 5,748 -
______________________ ____________________
Adjusted net income, before
loss on extinguishment of debt 5,504 8,774 10,735 9,704
Add: stock compensation expense,
net of tax 333 546 936 1,041
______________________ ____________________
Adjusted net income, before loss
on extinguishment of debt
and stock compensation
expense $ 5,837 $ 9,320 $11,671 $10,745
====================== ====================
Adjusted net income per share
- diluted, before loss on
extinguishment of debt $ 0.90 $ 1.54 $ 1.74 $ 1.77
====================== ====================
Adjusted net income per share
- diluted, before loss on
extinguishment of debt and
stock compensation expense $ 0.95 $ 1.64 $ 1.89 $ 1.96
====================== ====================
Selected Consolidated Balance Sheet Data
(in thousands)
(unaudited)
June 30, September 30, June 30,
2007 2006 2006
_________ _______________ __________
Cash and cash equivalents $7,393 $18,904 $15,641
Short-term investments - 9,425 25,650
Inventories 97,998 94,259 97,076
Property, plant and
equipment, net 71,237 71,430 72,673
Line of credit borrowings - - -
Long-term debt 92,064 117,535 127,729
Stockholders' equity 94,097 80,700 76,155
Supplemental Financial Information
Reconciliation of Operating Income to Adjusted EBITDA(1)
and Operating Income Margin to Adjusted EBITDA Margin
(in thousands, except percentages)
(unaudited)
Third Quarter Ended Nine Months Ended
______________________ ____________________
6/30/07 6/30/06 6/30/07 6/30/06
______________________ ____________________
Operating income $ 11,067 $ 17,927 $ 25,564 $ 27,031
Add: depreciation &
amortization expense 4,056 3,942 11,868 11,879
Add: loss on impairment
of long-lived assets 559 494 949 2,345
Add: (gain) loss on
disposal of assets (129) 152 (292) (45)
Add: stock compensation
expense 544 895 1,534 1,706
__________________________ ________________________
Adjusted EBITDA(1) $ 16,097 $ 23,410 $ 39,623 $ 42,916
========================== ========================
Net sales $ 153,227 $ 163,883 $ 445,568 $ 459,919
========================== ========================
Operating income margin
(operating income as
a percentage of
net sales) 7.2% 10.9% 5.7% 5.9%
Adjusted EBITDA margin
(Adjusted EBITDA as a
percentage of net sales) 10.5% 14.3% 8.9% 9.3%
(1) Adjusted EBITDA represents operating income before deduction for the
following non-cash charges: (i) depreciation and amortization
expense; (ii) loss on impairment of long-lived assets; (iii) (gain)
loss on disposal of assets; and (iv) stock compensation expense.
Reconciliation of Net Income (Loss) Per Share - Diluted
to Adjusted Net Income (Loss) Per Share - Diluted,
Before Loss on Extinguishment of Debt and Stock Compensation Expense
(unaudited)
Projected for the Actual for the
Fourth Quarter Ending Fourth Quarter Ended
9/30/07 9/30/06
_______________________ _____________________
Net loss per share - diluted $(0.27) to (0.00) $ (0.11)
Add: per share effect of
loss on extinguishment of
debt - 0.10
_______________________ _____________________
Adjusted net loss per share
- diluted, before loss on
extinguishment of debt (0.27) to (0.00) (0.01)
Add: per share effect of
stock compensation expense 0.06 0.11
_______________________ _____________________
Adjusted net income (loss)
per share - diluted,
before loss on extinguishment
of debt and stock compensation
expense $(0.21) to 0.06 $0.10
======================= =====================
Projected for the Actual for the
Year Ending Year Ended
9/30/07 9/30/06(1)
____________________ ___________________
Net income per share - diluted $0.56 to 0.81 $1.63
Add: per share effect of loss
on extinguishment of debt 0.93 0.10
____________________ ___________________
Adjusted net income per share
- diluted, before loss on
extinguishment of debt 1.49 to 1.74 1.72
Add: per share effect of stock
compensation expense 0.21 0.31
____________________ ___________________
Adjusted net income per share
- diluted, before loss on
extinguishment of debt and
stock compensation expense $1.70 to 1.95 $2.03
==================== ===================
(1) Components do not add to total due to rounding.
Projected for the
Year Ending
9/30/08
_________________
Net income per share - diluted $1.89 to 2.56
Add: per share effect of stock
compensation expense 0.27
_________________
Adjusted net income per share
- diluted, before loss on
extinguishment of debt and
stock compensation expense $2.16 to 2.83
=================
Reconciliation of Operating Income to Adjusted EBITDA
(in millions, unaudited)
Projected for the Actual for the
Year Ending Year Ended
9/30/07 9/30/06
__________________ __________________
Operating income $24.8 to 27.4 $30.3
Add: depreciation &
amortization expense 16.2 16.1
Add: loss on impairment
of long-lived assets and
(gain) loss on disposal
of assets 0.8 2.5
Add: stock compensation
expense 2.1 2.8
__________________ __________________
Adjusted EBITDA $43.9 to 46.5 $51.7
================== ==================
Projected for the
Year Ending
9/30/08
_________________
Operating income $26.0 to 33.0
Add: depreciation & amortization expenses 16.4
Add: loss on impairment of long-lived assets
and (gain) loss on disposal of assets 0.8
Add: stock compensation expense 2.8
__________________
Adjusted EBITDA $46.0 to 53.0
==================
Mothers Work press releases available through Company News On-Call at
http://www.prnewswire.com/comp/581877.html.
SOURCE Mothers Work, Inc.
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